Apr 15, 2019 (China Knowledge) - 5G seems to be the new in-thing among investors in China with 5G-related stocks surging by more than 70% over the last 6 months, according to a gauge compiled by Win.d, far surpassing the 22% gain of the Shanghai Composite Index over the same period.
As countries around the world scramble to build up their 5G networks in a race to be first, China is expected to spend billions of dollars on new 5G base stations and telecommunications equipment over the next few years, with 5G-related stocks becoming the direct beneficiary of this spending.
Despite the recent surge, some analysts believe that this is just the beginning with 5G networks potentially being able to bring about new technologies such as autonomous driving and smart cities which will revolutionize industries and create new trillion-dollar markets.
Apart from 5G-related companies, stocks in other innovative sectors that may stand to benefit from 5G such as IoT and cloud computing are also starting to rise.
At the center of this all are Chinese telecom companies which are traditionally cyclical in nature and largely driven by their cycle of capital expenditure (CAPEX). Spending by these telecom operators had peaked and bottomed out as telecom systems transitioned from 1G to 4G.
With the 5G era approaching, CAPEX of these network operators is expected to increase with China’s three state-owned operators announcing plans to spend more than RMB 30 billion on 5G development this year. This spending is expected to increase over the next few years and exceed their past spending on 4G which totals around RMB 800 billion.
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